Paying the price

Airbus and EADS must go into Farnborough in a mood of contrition and with new faces in charge, if they are to retain any credibility

In less than two weeks’ time, Airbus is going to have to step up to the crease at Farnborough and convince a sceptical industry that the A380 is still the solution to airlines’ long-haul hub-to-hub needs, and that it has a credible competitor to Boeing’s 787 in the wings.

Its parent company EADS also must persuade investors it has the management structure to run a complex, multinational organisation operating across several aerospace sectors and dominated by a subsidiary that itself splits production across four countries.

A hard enough job you might think, but to do it with former Airbus chief executive Noel Forgeard still in charge at EADS, the task becomes impossible. Whatever Forgeard’s knowledge of impending delays to the A380 and A350 programmes when he sold €2.5 million ($3.1 million) of EADS shares in March, and whatever his subsequent conduct after the problems became evident, Forgeard and EADS’s entire two-country management system has become a liability.

And yet, as we write, Forgeard remains co-chief executive of the world’s second-biggest aerospace company (although EADS’s French shareholders, Lagardère and the government, may yet sack him). Some might see his refusal to resign as courage, others as stubborn Gallic pride. But the fact is that – whether or not Forgeard did wrong or thinks he did wrong – he must go before 17 July if EADS and Airbus are to survive the Farnborough media onslaught with any credibility.

However, even were Forgeard to depart, EADS’s problems would be far from over. The first challenge facing shareholders would be to devise a management structure fit to run a global export-driven business rather than a consortium of national aerospace champions.

We have said it before, but what EADS needs is a single chief executive answerable to a board headed by a single chairman. Ironically, it was Forgeard who lobbied, while still running Airbus, to be made sole chief executive of EADS. His plan was thwarted by German shareholder DaimlerChrysler, which pushed successfully for Tom Enders – then in charge of EADS’s defence business – to be installed as co-chief executive as a counterweight to the wily Forgeard.

Enders – who kept his shares and is an Airbus outsider – ought to be given the job on his own. Bruised French pride could be soothed by establishing Arnaud Lagardère as sole chairman, with Airbus’s German chief executive Gustav Humbert – who must carry his share of the blame for the A380 farrago – making way for a colleague from across the Rhine.

EADS needs to go into Farnborough promising a fresh start. Too much has gone wrong for Forgeard to continue roughing it out. A wholesale clear-out at the top will not happen, and is unnecessary. But EADS and Airbus must be seen to take their customers and their shareholders seriously. Anything less than Forgeard’s resignation or sacking would be an insult.

Source: Flight International